jpmorgan's price is back where it was prelehman bankruptcy. that's right. on september 12th jpmorgan closed at $41.17. now it's $42 and change here. that's interesting. take a look at american express here intraday. late in the day we were getting some comments, saying -- from the company saying that a credit metric is showing the first signs much improvement in 18 months. that's moving amex a little as well. real estate investment trusts, we have noted they've been outperforming the market the last five or six days. they're moving up as well here late in the day here. there's a couple theories here. first one, reits are underowned by a lot of traders, they're being forced in by the recent rally. that makes the most sense. there's also traders who are holding their noses and trying to look past the poor commercial real estate numbers that are still coming. and by the way, the stabilization story still matters here in real estate investment trusts. tradertalk.cnbc.com. our team's covering the markets. let's go around the horn. first we'll talk to brian schactman at the nasdaq. >> we're weaker than the s&p 50l

and the dow but we've cut our losses almost in half but still down .8%. i'll call it's good, bad, and maybe ugly here. microsoft and yahoo both to the up side. the ak filing gave us details about the search deal. ten-year deal, some exclusivity could end after five years but there are some disincentives on that. yahoo will get 50 million a year for the next ten years. microsoft will hire a couple hundred yahoo employees. research in motion according to reports launching their cheapest blackberry to date, costs you 48 bucks at walmart, called the gemini. also some favorable notes out from a couple analysts. now we'll get to the bad. it's not terribly bad. google down .6%. cisco, which reports, big report after the bell, down .8%. and oracle maybe this is getting into ugly territory, down 2.2%. ebay started the week so strong, of course on the cover of "barron's" and just difficulty with paypal and what's going to happen with skype, down 1 1/2%. ea sports of course had an earnings report and it's been weak all day, down 7.3%.

but on the flip side let's get to some other stories. that was the good, bad, and the ugly, now we'll throw in the kitchen sink. garmin strong earnings, margin so much better than expected. four handle to a five handle. up 22%. whole foods, great report. actually upped their guidance. same-store sales still down but not by as much as what's expected. and looks like john mackey, the ceo there really getting back to core values. even though it's a premium product it is up 17.3% today. want to talk about value click. i haven't talked about it all day and i wanted to get to it. downgraded the sell at citi. looking forward as i often like to do here toward the end of the trading day, comcast reports tomorrow morning 26 cents a share the expectation, down 2.1%. and finally, newscorp will report after the close. reuters looking for 18 cents a share. let's check out the oil trade with sharon epperson down at the nymex. >> over the last couple weeks, brian, we've been in this range between $62 and $72 a barrel, and we're looking like we're

going into the upper end of the range today settling right near the the $72 mark. we are looking at the forex factor as another reason for oil prices to be higher. yes we did get a build in crude supplies but after all the dollar continues to weaken and that has impacted oil prices. the other factor that is helping crude oil prices today was actually heating oil and that's because of the aia data. crude supplies rose but distillate crude supplies surprisingly fell by over 1 million barrels and that is the big reason why we saw a bid up in heating oil up about 2 1/2% today. in fact, a lot of traders who watch that are paying close attention at how that's been coming in. heating oil, that is now, as you can see on the chart, above where gasoline is at this point. and even though it seems early to be buying heating oil for the winter, we are looking at that trade happening right now. natural gas is going to be in focus tomorrow with that storage report. today there was a fire and

explosion at a transcanned offshore platform. didn't do too much for natural gas but we are going to get that storage report tomorrow showing an increase in supply, probably around 59 to 63 bcf according to the plant survey. we also get the report from the government on the hurricane season, their updated forecast from noaa. that will come out tomorrow morning as well. a lot on tap. rick sanity l. to you in chicago. >> thank you, sharon. if you look at intraday ten-year chart, remember there's a lot more going on on the supply side. 75 billion next week in 3s, 10s, and 30s. so with that additional scrutiny. then you add in the s&p a couple hours ago in futures around 992. now they're well over 1,000. well, even though they're down on the day, that rally combined with supply boosted us right back up. and yes, look at a two-month chart. highest yield since the 19th of june. now let's switch gears a bit. it's always about foreign exchange lately. no matter if it's fixed income equities or commodities. intraday dollar index you can

see proactively moving down again after a bit of sideways yesterday and early this morning. if you look at the biggest mover in affecting the dollar overall it's been the british pound. look at a one-year chart. you can see we are now at a 1.70 handle, haven't had that since about the third week in october. and these are the lowest dollar index closing levels since about the third week in september. now let's go back to melissa francis. >> all right, rick santelli, thanks so much. taking a look at today's business headlines. according to abp, the private sector shed 371,000 jobs last month. that was more than wall street was expecting. it was also significantly less than the revised 463,000 jobs lost in june, giving more hope that the labor market is stabilizing. labor department will release its july non-farm payroll report on friday. in the meantime, outplacement firm challenger, gray & christmas reports the number of planned layoffs last month jumped 31% compared to june. that's the first increase in six

months. and the institute for supply management services index unexpectedly sank by .6% in july to a reading of 46.4. it's the tenth consecutive month that the services sector, which represents about 80% of u.s. economic activity, by the way, has contracted. and according to reports, federal housing finance agency director james lockhart is planning to resign and return to private life. lockhart has been on the job for three years and has pressed for stricter oversight of fannie mae and freddie mac, which is the fha regulates. >> thanks, melissa. and the important thing here is the market rally's srt of on hold as we can weigh weak data putting a little bit of a damper on recovery talk. let's talk about it with two experts. david pearl, co-chief investment officer at epoch. clark winter at sk capital partners. 50% increase from the s&p 500 from the march bottom.

we are discounting a rather robust recovery here. the argument of the bears is demand is not going to be there for that robust recovery. where do you stand on that? >> that's what we would say-s you've seen the market discounting a robust recovery. when you have a 50% rally in a short period of time, it's really a valuation increase. when you have a high valuation, you have high expectations of future earnings growth. there's a lot of room for disappointment from here. and the big problem is we've seen inventory restocking, easy compares. so good numbers but not demand. demand in the u.s., consumer, consumer's 70% of gdp. they can't borrow money easily. unemployment's high. they're having problems. in fact, wages have declined. so you can't have a sustainable robust recovery with the consumer hurting. >> so clark, is this increasing the possibility of a double dip sometime later in the year? >> yeah, early celebration of victory is something you always have to watch on these rallies. i think looking forward americans in particular have to understand that we're not

necessarily the locomotive of the great global growth and those of us who have been raised after the war believe that we are. we have to look outside where they don't have all the debt problems, the entitlement problems. the growth engine's going to come from outside. we're going to be a passenger on that train. >> so you're suggesting, for example, that the chiebz rather than us being the driver of global demand now suddenly the chinese are going to be the global driver of not just supply in buying the commodities but also trying to create the demand? >> on the margin they're going to shift from exporter to producer for national markets. in fact a couple interesting things lately. they're now invoicing all their trade in r 346789 b receivables. they're going out and buying long-term contracts, not dollars. on the balance we have to learn to be adaptive rather than proactive. >> the caboose, something we're not used to. although i would point out prior to the first world war we were the caboose. we weren't the market leaders until after the first world war. >> and there sbrn other countries that? adapted and have done very well. >> david, what sectors are you keeping your clients in? >> cyclicals and all the

economically sensitive have had a big rally, a lot of them up even more than 50%. small caps rupp 60% to 70%. the laggards are controversial ones like health care. >> i want to run to matt nesto and some breaking news here. matt, what's up? >> all right, bob, thanks very much. i'm at the breaking news desk here. we've just gotten word from the s.e.c. they have issued their first charges, their first enforcement charges against option trader broker-dealers for a violation of the naked short rule. the s.e.c. charged new york city-bas city-based hazan capital management and the principal trader there steven hazan with violations. also chicago-based t.j.m. proprietary with trading violations. they say, in quotes, "the traders and their firms engaged in short selling tactics that circumvented regulatory requirement through complex options transactions." the document goes on to state that the violations or alleged

violations at hcm occurred between january of 'o'5 and october of '05 and they had ill-gotten gains of at least $3 million. and then the second firm's violations took place between january '07 and july '07 with about a million in ill-gotten gains. sought first time naked short violation charges have been laid down by the s.e.c. >> and it's certainly a more aggressive s.e.c. that's for sure. matt, thanks so much. we've got about 48 minutes to go before the closing bell. dow's pretty much steady and so's the s&p here in the last 15 or 20 minutes. melissa? >> up next, the kotick tick by tick. the industrials have been well outperforming the s&p 500 so far this year. we'll look at the charts to explain why the sector scould b on the verge of a breakout. >> plus the back to school shopping season now in full swing. which retailers will be the big winners and losers? retail sales tomorrow. answers coming up. after the bell, newscorp and cisco are due out with their results. we'll have instant analysis today at 4:00 p.m. eastern. >> and here are the most active

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taking a look at today's business headlines, the commerce department reports factory orders unexpectedly rose by .4% in june thanks to strength in non-durable goods and orders for oil and coal products. economists had been predicting a drop of 1%. this is the fourth time in the past five months factory orders have increased. the mortgage bankers association reports mortgage applications rose 4.4% last week as rates on 30-year fixed loans hit a three-week low of 5.17%. that helped boost refinancing applications by more than 7%.

and merck and schering-plough agreed to pay more than $42 million to settle a class action lawsuit over their cholesterol drug vytorin and zetia. the drugmakers were accused of delaying unfavorable study results that would hurt sales. and drugmakers are not admitting or denying any liability as part of the deal, bob. >> it's time for the "fast money" final call. goldman's numbers were certainly impressive but today's trader has a new stock that can make it some fast money. here to tell us jon najarian. you know him. the co-founder of optionmonster.com and a "fast money" contributor. you know, jon, i'm watching these financials. i know you want to talk about blackstone. but the volume for the last three or four days in all the financials have been well above normal. blackstone two or three times above normal. >> yeah, bob, it's absolutely been phenomenal, the amount of trading, institutional volume, because we break it down and look at those ten lots, the small contracts that are trading as well as the 1,000 contract trade, which are more institutional footprints.

and you've got institutions just flooding into these stocks. blackstone is one that has hit for the last two out of the last three days. and of course going into earnings and seeing a performance out of for the res that was very strong and then those goldman numbers where they say 100 million -- 49 days out of the last quarter that the traders topped out at 100 million in profits. i think people are betting on smart guys right now, bob, and you and i know that there's a lot of smart guys and smart women at these firms and this is the best trader's environment ever. so that's not surprising to see blackstone rallying into this. >> what do you think is going on here? i noted earlier that jpmorgan today just passed its lehman bankruptcy price, the old price. we're back to where we were in september. blackstone isn't far away. it's, what, 14 1/2 right now. it was 15 and change just prior to the lehman bankruptcy on september what was it, 12th? so we're essentially knocking on the door here. what do you think is going on with the financials at this point? >> well, in particular, a stock

like blackstone, i think they've got the potential, bob. they're one of the of course folks that even though they may have overpaid a little to sam zell when they bought him out of equity office properties, they definitely have a lot of positives going on, and they're buying stuff for pennies on the dollar now. so they're not chasing highs. that's one of the problems, of course, when you're out there buying all the time. you're going to buy tops sometimes. right now i think they're buying troughs. and people are looking at that and projecting out three quarters, four quarters into the future. i'd also say take a look at aig because this move is phenomenal and they have earnings this week, five straight losing quarters, bob, and yet people are bet on them with a huge way with the new leadership there. and obviously there's the big short squeeze going on. they did that 20-1 reverse stock split. i'm looking at over 240,000 calls changing hands. that's not retail. that's institutional buying in a big way in aig.

>> yeah. 120 -- we're seeing volume magnitudes higher. there's been all sorts of speculation on aig, fannie, freddie all throughout the day here, some talk, speculation about a debt for equity swap that would certainly help the interest expense for aig. there's all sorts of things out there. let's talk a little about some of the industrials. johnson control, big well-known industrial company here. also getting some buying as well in the options market. >> yeah. and i've heard all day in your show people talking about industrials. certainly this is one of those core companies. everything from air-conditioning to the automotive exposure. and ops obviously the cash for clunkers really lit the fuse for stocks like goodyear, which have had phenomenal pops. people are betting for the same thing in jci, johnson controls. i'm long that. and i'm just following along with the smart money there, buying aggressively out of the money calls and when they're buying those out of the money calls they're not just saying they think the stock's going to

move a little. they think it's going to move a lot because they've only got two more weeks to be right because these august options that's how much longer they have to live. >> how about the tourist business? carnival cruise has been moving up along with the rest of the market and yet there was a story yesterday, i forget whether reuters ran it, about how tour operators are cutting cruises in alaska because they can't fill the berths, they're cutting the prices because they can't fill the berths. >> exactly. and this thing peaked out at about 30 in may, bob. and now it's made a run back up towards 30 now. and i think a lot of folks are looking and saying that top and those october levels are why we're buying puts aggressively, it looks like to hedge themselves more than it looks like they're betting on the down side. >> all right, jon, thanks very much. good to see you as always. coming up on "fast money" all the after-hours action on tech giant cisco plus the update from john chambers' conference call. plus, time to invest in water? declaring a 7% increase in its

dividend yesterday, the ceo of aqua america joins "fast money" to discuss the future of the industry. want to go to michelle caruso-cabrera down at the breaking news desk. michelle, what's up? >> we've got breaking news related to the victims of bernie madoff, bob. they're going to find it probably easier to get some of their money back due to a new change announced by irving picard, who's in charge of liquidating madoff's assets and trying to get the money back to them. here's the story. if you gave, say, $500,000 to madoff years ago and it built up to $10 million and you put in a claim for $10 million, irving picard has always said, actually, you're only getting back $500,000. and people have disputed that. what he said in the past was i'll give you the 500 grand if you give up your claims for the rest of the money. now he's changing his position. he says you can still get your 500 grand and still push your claim on the other issues. so some people who were fighting arguing they deserve more money will probably now be able to get money sooner or at least get some cash. that is a change. change in policy by irving picard when it comes to those who are disputing how much money

they should be getting back from the liquidation of madoff's assets. back to you. >> michelle, thanks so much. about 30 minutes to go before the close. the dow and the s&p making a bit of a comeback. they're down just a little more than .1%. the nasdaq right now is down about 2/3 of a percent. >> and melissa, are your tax dollars being used by wall street firms to lure top talent away from rivals? charlie gasparino has the details when we come back.

here's how the markets are shaping up. dow was down 100 points earlier in the day. we have come back thanks to the strength of fimz. you're looking at citigroup up, bank of america, american express made positive comments a little while ago saying the credit metrics were showing signs of improvement. the nasdaq is really the laggard here, down 0.9% versus 0.3% and 0.4% for the dow jones industrials. see, they're up a little off the lows but not much. the s&p 500 doing a little better here. melissa, back to you. >> thanks, bob. are your tax dollars funding new guaranteed multimillion-dollar compensation contracts designed to lure heavy hitters away from the competition on wall street? on-air editor charlie gasparino

joins us now with that story. but charlie, before you get to that i want to know what's happening with john mack of morgan stanley. >> this is not according to morgan stanley the final days of john mack. this started with a report from one of the guys in the markets that i really respect, a guy named doug kass who basically says john mack was now going to be handing over duties, major parts of -- he's the ceo. the major parts of his duties to jim gorman and signaling essentially that jim gorman will be the next ceo of morgan stanley. i called up morgan and i talked to probably -- doug kass is one of the best investors i know. jean marie mcfadden is one of the best flacks i know, the flak of morgan stanley zprks she said there's nothing imminent, nothing happening. what we do know is john mack probably next year is going to step down as ceo. he's going to be 65. and become chairman of morgan stanley. and then the job is over open to either gorman, right now he's number two, head of the mortgage

department, or elite shama, head of the investment bank. a lot of people think it's going to be gorman. we'll have to see what happens. they tell me it's nothing imminent. i have a feeling it's somewhere in the middle that there is a preparation where signals are now pointing to jim gorman as being the ceo, but we'll have to see what happens. the other story i have, which is kind of the titillating one as you've mentioned before about our taxpayer dollars being used. it all revolves around -- and this is kind of making the rounds today. a woman by the name of sena senaz zamia, she was in fixed income sales at goldman sachs, she has gone to bank of america, and what the people at goldman sachs are telling me is this is the package -- at least this is the way i guess she described it to them. she's getting a guaranteed two-year deal, she's going to be making up to $15 million each year and her goldman sachs stock will be covered and that stock is in the range of something like $9 million. so they're going to pick that up. that's a lot of money as you

know, sbleesespecially a lot of coming out of a bank that is essentially owned in part by the federal government. very controversial issue. we talked about the trader from citigroup recently, another bank that's essentially owned in large part by the federal government, possibly being on the hook to pay a trader $100 million. i will say this. in the intervening couple of hours since i reported this merrill lynch has come out and said on the record that those numbers are not accurate. they won't say what they are. it's obviously too high. but they won't say what they are. i went back to my sources at goldman, and they confirmed that they believe those are the numbers. i will say this. when you're kind of doing the he said/she said, especially on this. when you're a top trader, top salesperson at goldman sachs, you are making a lot of money. you are not going to go to a bank like bank of america for a pay cut. so whether they're paying her 15 or 14.99 million dollars, it's almost -- it doesn't really matter that much to me.

they are paying a lot of money because you don't leave a job at goldman sachs. she ran the sort of desk out there. to take a job at b of a. from what i understand, she's getting more responsibility. for anything less than at least your paycheck. and her paycheck would have been quite substantial at goldman sachs. which raises the issue. you know, you have a government bailed out bank and they're paying a lot of money to bring people over. obviously, this isn't the only one. there's a lot of others going on. from what i understand, there was a person in operations at citigroup, also lured from goldman sachs, was making $500,000 at goldman sachs. this person was making 1.5 million at citigroup. so it's really a sort of issue that's going to be coming up -- >> hey, charlie. >> yes, go ahead, i'm sorry. >> why do you think someone at goldman sachs would tell you this? do you think they're trying tospread spread around the bad pr? goldman sort of unfairly has been everyone's whipping boy lately. >> i've written that. i've written both negative stuff, nasty stuff about them, but also that they were i

believe in some of the press accounts way over the top. >> insanely vilified. >> insanely vilified. because they are not the cause of the subprime crisis. citigroup, merrill lynch, you name it. lehman brothers, bear stearns. why are they telling me this? why does anybody tell me anything? i mean -- >> they can't help themselves. they hang out with you and people can't help themselves. they come over and talk to you. i've seen it myself. it happens all the time. >> obviously, goldman sachs wants to spread around the nasty stuff. >> i think so. >> but that's how i get all my stories anyway. let them have their chance once in a while. >> this is why we love youish charlie gasparino, thanks very much. >> equal opportunity abuser. >> there you go. 20 minutes to go before the closing bell. the dow and nasdaq both in the red. the dow down about 40 points. bob. >> we'll discuss which retailers will make the grade this school shopping season. retail sales tomorrow, folks. and which you should expel from your portfolio. >> and then coming up after the bell a "first on cnbc" interview with the ceo of utility giant

pg&e. hear where he thinks energy prices are headed and whether he thinks president obama's cap and trade proposal could have on his business. we'll be right back.

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let's take a look at today's under the radar stocks. narrowing second quarter loss to $10 million, beating wall street's estimates because of a big drop in research and development expenses. and ameristar casinos reporting a 16% drop in its second quarter profit to $14 million, missing wall street's forecasts on both the bottom and the top lines as consumers reduce the amount of money they spent in the company's casinos. and health care reit hcp pricing a new stock offering of 15 1/2 million shares. $24.75 per share. this is a 6% discount to its closing price on tuesday. htp says it will use the nearly $400 million in net proceeds to pay down debt. melissa? >> all right. thanks so much. back to school shopping is in full swing and many cost-course consumers are turning to discount retailers for their school supplies.

but are the stocks of these retailers still a bargain despite big run-ups during the recession? cnbc's rebecca jarvis tells us what wall street thinks. hey, rebecca. >> hey, melissa. valuations aren't as cheap as some of the merchandise, but analysts are saying that the discounters still hold value for investors, even in what's expected to be a lackluster back to school year, the average family expected to spend about 8% less than they did last year. ubs, though, says the discounters will succeed in that environment. walmart, target, they are among the names that are expected to get more because people are spending less. about 22.3% of shoppers in ubs's consumer survey are responding that they will buy more of their back to school clothes at the world's largest retailer. 10 1/2% say they'll buy it at target. and it is a trend that piper jaffray's jeff kleinfelter also expects to see. >> we expect discounters to continue taking share. it really depends on which discounter. there's the walmart and target

competition for commodities and school supplies and every other category in the general merchandise prototype. >> kleinfelter says the off-price retailers like ross and tjx will also continue gaining share. can they drive profit growth as those sales materialize? brian tunic thinks they will. >> t.j. and ross are at or near all-time highs here. they're a good place for investors to hide. they've been hiding there for the last couple of quarters now. i think the good news is we will see more upward earnings revisions. >> still, tunick says the easy money has been made with the retail stocks up more than 50% from the march lows, as you see there on your screen. they've outperformed the overall markets by about 10%. he says to drive profit growth going forward there's still some cost cutting that can be done. inventories are the major theme there. they're running down about 10% to 20% versus last year. melissa. >> great report, rebecca jarvis. thanks so much. for more on back to school season i am joined by senior

vice president at bree & murray carrot & company. and also james rousseau vice president of global consumer insight at the nielsen company. thank you to both of you for joining us. james, let me start with you. everyone's act like this is going to be a horrendous back to school season but rebecca just said spending's down 8%. that doesn't sound that bad to me. >> well, we're looking for evidence of a recovery, sustained recovery in consumer spending, and back to school is an interesting dynamic because what we're seeing here are two different areas. one we have the essential necessity component of back to school, which is actually projected from nielsen to do relatively well. our sales forecast is up 1%. if i can say, that's relatively well. the other side of back to school, though, is more the discretionary purchases, more of the apparel pieces to back to school. and there we're expecting to see a continuation of a slowdown. so the story in back to school really is one of continued moderation as consumers focus essentially on their back to school level of spending, basic spending, and potentially albeit at very minor levels move to

discretionary levels of consumption. households are dealing with intense labor pressures. >> eric just said there's not going to be a lot of spending on apparel, but a lot of kids under 12 or so they grow so much every year. unless you send them to school naked they're not going to fit into clothes from last year. you've got to buy them something. >> i think there's going to be some level of spending but it is going to be down. the consumer right now is not going to pay full price and we're going to see tomorrow when july costs come out that the full price plays are just not working, especially in the beginning of the season. >> eric, like who, though? give me some names. who's going to do well? >> i think the winners here are going to be names like aeropostale. they're very much a value player here. you can look at some emerging fashion players like a j. crew or true religion. but to us it's going to be a value play. it's going to be a player who's going to be the low price leader, especially in the beginning of back to school. >> these stocks have had a huge run. the rlx is up 57% since march. are there any stocks that are still a buy right now? >> it's interesting because

consumers have been telling us for the better part of a year and a half now tlou our analysis of shopper trips and transactions that they continue to go and shop out discounters, to some extent club stores, to a lesser extent drug and grocery, but clearly the retailers play in that value oriented space that are delivering that motivation for consumers are the ones that have been succeeding and we're projecting to succeed not only as we move into the back to school season but beyond that into the holiday selling season. >> like who? >> some of the retailers specifically have already been mentioned. when you look at a walmart or a target, within the club store space you have a b.j.'s, obviously sam's division, a costco. the re-emergence of the dollar channels within the dollar general, for example. but those retailers that are really communicating their value. and value not only based on price but convenience is what is resonating with consumers, again, from the research we see. >> eric, july same-store sales out tomorrow. are there going to be any surprises? >> i think there will be some surprise on the down side like

american eagle, which has been kind of squeezed by aeropostale and abercrombie. on the other side nice numbers from aeropostale and even nice numbers from urban outfitters which has done a very nice job of cleaning out inventories to get ready for back to school and fall. >> james, do you agree with that? >> i do, actually. one thing i want to point out is as we get through this season we are seeing evidence of increasing levels of optimism from consumers. we're specifically asking them about their level of expectations of recovery in the back half of 2009 and into 2010. and those metrics continue to increase. so we see this picture increasing -- >> really? >> yes. >> eric, who do you think is going to be the biggest loser? >> i think the biggest loser is it's the exact opposite of value players, people that have to get full price. we have a sell rating on american eagle and we feel this is a play that's getting squeezed by aeropostale on the low end and squeezed in some of the fashion areas by abercrombie. if you're stuck in that area and you have to drive pull price selling to get your business to work, that's a recipe for a miss. >> james, who's the biggest

loser in your book? what stock would you stay away from no matter what? >> it would be more of the specialty retailers. when you look at shopping trips generating to the value-oriented players, those folks in the specialty channels, whether it's a consumer electronics play or apparel play, that's where we see traffic really being slow and transaction size decreasing. those are the challenges in that end of the sector. >> all right, guys, thank you so much for joining us today. we appreciate it. >> thank you very much. >> 10 minutes to go before the closing bell, melissa. dow jones industrial average paring some of its gains but off the nice little rally we saw about half an hour ago, financials are leading the way. the nasdaq is the sector that is up the most. the index that's up the least right now. melissa? >> bob just mentioned financials. they have been outperforming over the past four weeks. up next matt nesto tells us whether that rally is sustainable.. most people try to get rid of algae, and we're trying to grow it. the algae are very beautiful. they come in blue or red, golden, green.

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they're cheering. we're back. a strange day for stocks today. roughly four out of five issues in the s&p 500 trading to the down side, yet financials are at a nine-month high. matt nesto takes a look at the lonely leadership. and matt, there's a number of interesting stocks really sticking out here. >> oh, yeah. no question. you take aig right off the table. the big picture here, bob,

thanks to my trusty rate of change monitor, is that 2.7% gain for the financials is the best single-day move this index has seen in a month, since the middle of july. if you take a look at what's going on here over that past month period of time, you can see the financials with a full ten percentage point, a 2-1 outperformance ratio versus the s&p 500. so let's dive into not fins to the left, fins to the right. i was going to go with that. i'm going to go with finlandia. again, the land of financials, they're pretty much by themselves. materials have just turned positive. there are now actually two positive sectors. but they have regained heavyweight status. they're now the second largest weighting behind health care. they were in fifth place in the trough of the market. but they have now eclipsed health care and energy stocks to get back into the top two position. they're behind tech, excuse me, for the second position. broad-based participation on the industry level. there are four financial industries. banks, diversified financials,

insurers, and reits. i mentioned reits yesterday. they were hot yesterday. they're hot again today. all four of those industries are working and leading the market here today. and secondly, since the trough in march far and away the best, up over almost 150%. but still, let's not lose sight of the fact that the first were often worst, and they are. if you go back a year ago, they are still down 36%. take a look at my four off the floor here. since this rally began four weeks ago, these stocks are in the four different industry groups. marshall & isley up 56% during that period of time. capital one up 48%. aig's up -- i can't even keep track anymore it's moving so fast. more than 70%. and prologis with a 40% pop during that period of time. >> thanks very much, matthew. we're coming back with the closing countdown. >> and then coming up after the bell cnbc is your home for earnings central. we'll have instant reaction and analysis to the latest results from newscorp and cisco. we'll be right back.

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preferred for common stock? it's dramatically increased the amount of common stock that's outstanding. therefore, when you're in an index like the s&p 500, they have to increase the weighting of citigroup in the s&p 500, and they have to decrease the weighting in all the other 499 stocks. that's why this crowd is standing right here. right at the close, all these people have big orders. these are called block orders. and the indexers have to buy citigroup on the close. you're going to see big volume here at the close hopefully. usually, they don't change the price that much. but we never know. they'll do probably 2 billion shares. the word was there was something on the order of 700 million shares to buy at the close. it could be bigger, could be smaller. you never exactly know. financials have been strong all throughout the day. mortgage insureser are also big. and we'll also see real estate investment trusts also have a terrific day. there's the closing bell. melissa francis is up next.

it is 4:00 p.m. on wall street. do you know where your money is? welcome to "the closing bell." i'm melissa trins in today for maria bartiromo. and here's what we're following at the close. the summer rally stalling today after disappointing economic data and profit taking. but stocks are off their lows of the session. the main data culprit, a weak reading on the services sector, which has now contracted for ten consecutive months. and cisco and newscorp ready to report their latest earnings. we'll have instant analysis and reaction just as soon as the numbers hit the wires. here's a look at how we finished the day on wall street. the dow slumping here at the close. it's down about 40 points. about .4%. almost half a percentage point. the nasdaq down almost a full percentage point. and sft s&p 500 down almost a third of 1%. bob, give us the recap. >> here's what's important. while the dow was down, there's actually a lot of excitement in several sectors.

energy sectors were weak throughout the day. the big story was in the continuing strength in financials. let's take a look at three government-owned names. just a lot of discussion on trading desks about what the heck was going on here. aig was a big topic of conversation. 134 million shares of aig traded today. it normally traded 8 million, 9 million, 10 million. 134 million. okay, we've got a new ceo that's coming in very soon. robert benmosche. we know that. earnings report. we know that. what precipitated this gigantic bout of what looks like short covering is not exactly clear. those were the obvious explanations but that's not entirely satisfying because freddie mac and fannie mae also had big moves to the up side as well. some people speculating some quad fund was covering the shorts. not entirely clear. let's talk about the rest of the financials that were strong today. jpmorgan up nicely on strong volume. again, back to where it was prelehman bankruptcy prices for them. citi was strong. i just showed you the rebalancing. they're still waiting here to rebalanc